An inspector general report says the Federal Reserve did a poor job of keeping construction costs in check during a major renovation of its Washington buildings, but there’s no evidence of misconduct.
The Fed’s inspector general on Wednesday said the nearly $2.5 billion renovation was poorly managed, but not marred by illegal activity, an allegation floated by President Trump in his criticism of then-Fed Chairman Jerome H. Powell.
“At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the U.S. Attorney General in accordance with the Inspector General Act,” the report said.
People were interested in these podcasts
“Further,” it said, “while our report outlines deficiencies in the management of the renovation project, resulting in our recommended corrective actions in accordance with the Inspector General Act, we did not identify administrative misconduct during our evaluation.”
The 120-page IG report was highly anticipated because of the tortured history between Mr. Trump and Mr. Powell, whose term as chairman expired in May.
Mr. Trump repeatedly hectored Mr. Powell to lower interest rates to supercharge the economy.
At the same time, the president blasted the chairman over cost overruns at the Marriner S. Eccles and 1951 Constitution Avenue NW buildings. Renovation costs ballooned from $1.32 billion in February 2020 to $2.38 billion in December 2024.
A president can fire a Fed chairman only for cause, and Mr. Trump suspected fraud or nefarious activity tied to Mr. Powell and the projects — something the chairman denied.
The saga played out for months. At one point, Mr. Trump and Mr. Powell took a joint tour of the project.
The Fed faced a criminal inquiry over the project, though a judge quashed subpoenas, calling them harassment of Mr. Powell.
Sen. Thom Tillis, North Carolina Republican, said he would block any of Mr. Trump’s Fed nominees until prosecutors dropped the case and left the matter to the inspector general.
The IG report said cost overruns were due to sloppy management and could have been avoided.
“We identified numerous factors that contributed to the significant construction cost increases, including inflation, limited subcontractor bidding, substantial board design changes, and site conditions,” the inspector general said. “We also found that the effect of some of these factors could have been mitigated by more effective project management and contract execution decisions.”
The report found flaws in the bidding process, construction management and failure to establish a maximum price.
Senate Banking Committee Chairman Tim Scott, South Carolina Republican, said he welcomed the IG report and that the Fed should have acted more responsibly.
“Inflation does not change the Fed’s responsibility to manage its resources prudently and be accountable to Congress,” he said. “This committee will continue rigorous oversight to ensure the Fed is transparent and stays focused on its mission.”
Mr. Powell requested the inspector general inquiry in mid-2025.
Around that time, Republican lawmakers called Mr. Powell to Capitol Hill to explain aspects of the project, including fancy marble and fountains. The chairman said the project was reusing marble and did not have VIP features or special elevators, as some lawmakers charged.
“We assessed the potential cost increases associated with certain design features, such as the [Eccles] building’s marble, water features, and garden terrace,” the inspector general said. “We determined that these features did not materially contribute to subsequent construction cost increases.”
The report made seven recommendations to improve management of the project, including the validation of all contract costs and the establishment of “clear lines of responsibility, authority, and accountability for overseeing the project’s performance and completion.”
Contact the author
Please read our comment policy before commenting.